SN- DPO-Public Financial Support Credit

closed

The Public Finance Support Credit Program for Senegal operation aims to support the authorities' efforts to bring their fiscal stance to a sound and sustainable track, mitigate fiscal risks emanating from public sector entities and protect critical developmental objectives at a time when the authorities must maintain a tight fiscal policy and cope with the impact of the global crisis. Both the urgent need for financial assistance in a highly uncertain global context and the current focus of policy makers on fiscal issues make a stand-alone operation a more appropriate instrument for Bank support to the authorities at this juncture than a new series of Poverty Reduction Support Credits (PRSCs). This approach will also provide time to the authorities for the design and implementation of a medium-term reform agenda that could be supported under the next series of PRSCs. Policies and reforms supported by this operation are well aligned with Senegal's poverty reduction strategy paper. The operation is also fully consistent with the objectives of the Bank's FY07-10 country assistance strategy. The country is trying to emerge from its 2008 fiscal problems at a time of extraordinary stress in the global environment. The major channels of transmission of the global economic recession to the Senegalese economy are exports, remittances, tourism, and foreign direct investment. Being a very open economy, Senegal's exposure to the global crisis is significant. However, the already evident strength of the authorities' response to their 2008 fiscal problems is turning out to provide a critical boost that, together with a prudent macroeconomic management going forward, should help Senegal weather the global crisis, at least through 2009.